IFRS 9, Financial Instruments, is applicable to modarbas from June 30, 2022. Financial reporting requirements pertaining to the classification and provisioning of financial assets are presently provided under the specific law and related Modaraba Regulations, 2021 (Modaraba Regulations).

The Accounting Standards Board on SECP’s request has developed the Accounting Guidance ‘Application of IFRS 9 by Modarabas’ (the Accounting Guidance) to facilitate modarabas in the implementation and transition to IFRS 9. The Accounting Guidance aims to assist management of modarabas in developing an understanding and effectively applying IFRS 9.

The Accounting Guidance discusses key areas relating to IFRS 9 application, including:

• classification and measurement of financial assets and financial liabilities;

• application of Expected Credit Loss (ECL) model and its interaction with the time-based classification and provisioning requirements specified in the Modaraba Regulations; and

• the disclosure requirements.

You can access this publication at http://www.icap.net.pk/accounting-guidancetools

We hope you find the publication helpful.

Circular 1 – Accounting Guidance – Application of IFRS 9 by Modarabas